Business & Money | Thursday 9 November, 2017 3:06 am |

The VAT implementing regulations specified the financial services that will be exempt from VAT, which include several transactions and services such as interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts.

 

Other exempt services include the provision or transfer of a contract of life insurance or the  re-insurance of a life insurance contract, which is defined according to the Implementing Regulations as any contract of conventional insurance or Takaful or other form of Islamic insurance provided by a licensed provider in the Kingdom, which results in the payment of a conditional amount of money in the case of death or the occurrence of an accident with an impact on life, or any similar contract provided by a non-resident supplier.

 

VAT exemption excludes cases where consideration payable in respect of the service is by way of an explicit fee, commission or commercial discount, as per Article 29 of VAT Implementing Regulations.

 

With regards to money transfers, the standard 5% VAT rate will apply on the explicit transfer fee only, not the total transfer amount, and that it should be paid by the person making the transfer.

 

The Implementing Regulations outline the treatment of economic activities, whether taxable at the standard 5%, zero-rated, exempt, or outside the VAT scope. Registered businesses conducting economic activities subject to VAT, whether standard rated or zero-rated, are entitled to deduct input tax, whereas registered businesses conducting VAT-exempted economic activities are not entitled to deduct these amounts.

 

GAZT called upon all VAT-eligible businesses to register for VAT through the dedicated portal on the website (VAT.GOV.SA). The website also features a wide range of tools and

 

resources for businesses, including video tutorials and information packs on the various VAT registration and readiness aspects.

 

VAT will be implemented in the Kingdom of Saudi Arabia on 1st January 2018, as part of the Unified VAT Agreement for the Corporation Council for the Arab States of the Gulf.